o.d. to o.d.

Understand How Fixed Expenses Affect Your Practice

A novel device can demonstrate how money flies out of your office when your schedule is not full.

BY Walter D. West, O.D., F.A.A.O. Chief Optometric Editor

While pondering the value of time and how to impress the importance of that value on doctors and their staff, I did what any good researcher would do in an effort to find timely information — I Googled it. An interesting product caught my eye that I thought I'd tell you about. The product is TIM! (Time Is Money).

The website (www.bringtim.com) describes TIM! as “a fun yet useful office clock that tallies the dollars spent in long meetings. Simply enter the number of people in the room, ballpark an average hourly wage, and press the illuminated start button. Everyone will be amazed as the dollars pile up with every second that ticks by. TIM! is the ultimate conversation piece and gift idea for anyone that attends long business meetings. Doubles as an office clock. Money back guarantee if you are not delighted!”

A tool for the entire practice

While you can use TIM! for business meetings, as its marketing tells us, I suggest that it be used differently in your practice. This is a great tool to help your staff appreciate how much of the money collected from your patients are spent on merely having your office open for business. In other words, it can show very clearly how the fixed expenses of your business mount up through the course of a day, week or month.

Understanding your costs

Here's my suggestion: Enter the cost of running your practice on an hourly basis. For this example, think of the average month having 30 days and the average clinic day as eight hours. So, discover your fixed overhead by combining costs associated with your staff (including wages, taxes, benefits), your office mortgage or monthly rent, all your note payments for equipment, furniture, fixtures, leasehold improvements, utilities, telephone, connectivity and any other monthly cost that exists for your practice to be open for business. Now, divide that total by 30 to arrive at the cost per day, and then divide that by eight, and you have the amount it takes to run your practice every hour.

Now that you know the cost to run you office per hour, enter that amount into the TIM! When you start your business day, start the TIM! and every second, minute and hour will be represented, not in units of time but rather, in dollars and cents, thus dramatically demonstrating how money is going out whether the practice schedule is full or not.

You can restart TIM! each morning or start it on the first of the month, and let it run until the end of your clinic schedule on the last day of the month. Watch that overhead mount up as the month goes by.

Reevaluate your operations

Remember that you pay rent for your practice for the entire month, everyday of the month, 24 hours a day. By being aware of how the fixed overhead in your practice mounts up, even after office hours and through weekends, you may want to reevaluate and think about expanding your office hours, thereby getting more use of what you're paying for. OM